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Lori Shefchik will start as an assistant professor of accounting at Indiana University this summer

PhD Profile: Lori Shefchik Studies Auditor Behavior

When PhD candidate Lori Shefchik was in first grade, she thought she wanted to be teacher when she grew up – that is, until she found out you had to go to college.

That’s when she switched her dream job to accountant. She knew her Mom had worked in that role for the family’s construction company without a college degree.

“My fiancé teases me,” says Shefchik, who will start as an assistant professor of accounting at Indiana University this summer. “He thinks it’s funny that after 10 years of higher education, I’m becoming a ‘teacher’ after all.”

Shefchik, who grew up in Sturgeon Bay, Wisconsin, earned a bachelor’s and master’s in accounting from the University of Wisconsin-Whitewater before beginning her career as an auditor at Deloitte in 2005. “It’s a great place to start your career because of the unbeatable experience you get,” she says. “But after four years, I decided I was ready for a change”

Entering Academia

Exploring options, she spent time talking to a lot of PhD students to figure out if academia would be a good fit. “I wanted to make sure I’d enjoy the research before I got into it,” says Shefchik, who has already published studies in the journals Accounting Horizons and Auditing: A Journal of Practice and Theory.

For her research, Shefchik draws inspiration from her days as an auditor. Specifically, she examines how auditor behavior is influenced by institutional and environmental factors with the aim of improving audit quality. As part of this research, she studies how new accounting regulations, such as those instituted by the Sarbanes-Oxley Act of 2002 in the wake of major corporate accounting scandals, have influenced auditors’ judgments and decisions.

“Sarbanes-Oxley was designed to improve audit quality, but there are still a lot of effects that have gone unexplored. I think it’s important to better understand the benefits, but also to consider whether there are any unintended consequences,” Shefchik explains.

Psychological Experiments

In her research, Shefchik employs experimental methods and uses cognitive and social psychological theories to explain behavior in the context of auditing. For example, for her dissertation, she ran experiments to examine whether the pressures of “risk-based inspections” imposed by auditing regulators, combined with the pressures from tight resource constraints that naturally occur in the audit environment, lead to negative effects on auditor performance.

Currently, Shefchik is excited about a new paper she presented in January 2014 at the AAA Auditing Midyear Conference. In it, she and her co-authors predict that more skeptical auditors, those who dig deeper into details when examining evidence, deplete their cognitive resources faster because of their highly questioning nature.

While bigger skeptics are typically believed to outperform others in auditing tasks, Shefchik explains, “we find that under conditions of high depletion, their performance declines to a level below that of their less skeptical peers. The results are important because audit environments are ripe for inducing high levels of depletion,” she says.

Choosing Tech

After Shefchik decided to leave the world of auditing and enter academia, she was drawn to Scheller College of Business by the excellence and expertise of the accounting faculty here. “They’re all very excellent researchers, and they all specialize in behavioral and experimental methods,” she explains.

“Tech is a great place for PhD students because we get so much one-on-one attention,” Shefchik adds. “Faculty doors are always open, and the professors will work with you on research projects. They allowed me to go to a few conferences per year, helping me network and cultivate research partnerships. That support has been invaluable.”

During her PhD studies, she has enjoyed teaching the Auditing course to undergraduates. “They appreciate my background as an auditor,” she says. “Whenever I tell stories of relevant experiences, they get really excited.”


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